Default Strata Collections

In three interesting decisions from the Civil Resolution Tribunal (“CRT”), three different strata corporations sued individual owners to collect amounts from the owners. What is interesting about those decisions is that the individual owners failed to respond to the CRT disputes and the strata corporations were able to obtain default orders regarding the claimed amounts. Because the owners didn’t respond, the CRT did not consider whether the amounts were properly claimed from the owners: it assumed responsibility.

“In an application for default judgment such as this, liability of the [owner] is assumed. There is no need for the tribunal to confirm the amount of the bylaw fines or that proper procedures were followed by the applicant in assessing fines. Further, in a debt claim, the tribunal will generally order the amount requested by the applicant plus interest and reasonable fees and expenses.”

What is concerning for individual owners living in strata corporations is that if they fail to respond in time, they can be subject to paying fines or other claimed amounts to the strata corporation that are not actually properly owing by the owner. The amounts could have expired by limitation periods or never have been properly owing in the first place.

In the case of Yang, the strata corporation repaired the owner’s balcony and claimed the repair cost back from the owner. The CRT did not analyze whether the owner was responsible to repair the balcony because responsibility to repair is subject to whether the balcony was common property, limited common property, part of the strata lot or whether the bylaws required the strata corporation to repair the balcony. By failing to respond, the owner became liable to pay almost $10,000 in repair expenses that may not have been properly owing by him based upon the Strata Property Act and the strata corporation’s bylaws.

In the case of Otchere, the CRT permitted the strata corporation to claim its full arrears amounts without having to prove what the arrears consisted of and whether they were properly claimed from the owner.

Failing to respond to a claim in the CRT can have significant consequences as a CRT order is enforceable in the Supreme Court of BC. Ignoring a CRT claim will not make a bad claim go away; it can cause an owner to become liable for expenses that it wouldn’t have been liable for if the owner had responded.

There is good news, however, in that an owner who has a default order against them, can apply to have that order set aside. To do so, the CRT will consider specific criteria (section 141 of the CRT Rules):

a) whether the reason for default was due to an accident, illness or other cause beyond the control of the defaulting owner,

b) whether the defaulting owner was acting in good faith,

d) whether the defaulting owner has a defence against the strata corporation’s claim that is worth investigating, and

e) if there is any delay in submitting the request for cancelling the default order, what is the reason for the delay.

Further, Rule 142 provides that the CRT will not generally cancel a default order if the owner could have prevented the default.

As a result, if an owner learns that a strata corporation obtained a default order against them, the owner must quickly act to overturn that default order and must have good reason for the CRT to overturn the order. Overturning a default judgment is a last resort. The best defence is a prompt defence and owners should promptly respond to any CRT claim, rather than rely on being able to potentially apply to set aside the default order.

It should be noted that setting aside a default order does not make the claim from the strata corporation go away. It only sets aside the default order. The owner and the strata corporation then have to apply for a hearing by the CRT to have the claim adjudicated and a decision on the liability, merits and outcome of the claim. The owner may still lose the claim and have judgment passed against them even if successful in setting aside the default judgment.